Two Cheapest Cities in America Are in Texas

Don't mess with Texas when it comes to finding the cheapest places to live in America. The Lone Star State is home to the two least expensive cities in the U.S. From groceries and gasoline to housing and health care, the cost of living is low across the board in the South Texas cities of McAllen and Harlingen, which rank first and second, respectively, on our 2017 list of the cheapest places to live in the U.S.

There are trade-offs to affordability. Both cities have above-average unemployment, which can make it harder for residents to bring home steady paychecks, and the poverty rates are well above average versus both the state and national poverty levels. On the plus side, it's a short trip to visit Mexico or beaches on the Gulf Coast.

1. McAllen, Texas

Cost of Living: 23.7% below U.S. average

City Population: 140,269

Median Household Income: $44,254 (U.S.: $53,889)

Median Home Value: $115,400 (U.S.: $178,600)

Unemployment Rate: 7.8% (U.S.: 4.9%)

McAllen is about 30 miles west of Harlingen on the Rio Grande. It's a larger and relatively more prosperous city—household incomes are a full $10,000 higher than in Harlingen—yet McAllen's superlow living costs come at a price. The poverty rate is 26.1%, and obesity runs rampant. WalletHub.com named it the fourth-fattest city in America (Jackson, Miss., is number 1). The Mexican city of Reynosa, directly across the border, has been the scene of violence between drug gangs and Mexican security forces. On the plus side, McAllen is famous for bird watching because of its location on a major migration route. The Quinta Mazatlan, a luxury birdhouse with more than 15 acres of birding habitat, is not to be missed.

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2. Harlingen, Texas

Cost of Living: 20.6% below U.S. average

City Population: 65,774

Median Household Income: $34,466

Median Home Value: $80,600

Unemployment Rate: 7.2%

South Texas border towns are known for low costs of living, but not always for happy reasons. In Harlingen, 32.5% of residents live below the poverty line. For Texas as a whole, the poverty rate is 15.9%; for the U.S. as a whole, it's 13.5%. However, just about everything, from groceries to gasoline, costs less in Harlingen. A good cut of steak goes for 28% less than the national average (this is Texas, after all). The median home value in Harlingen is a striking $98,000 less than the U.S. median. In addition to its proximity to Mexico, Harlingen is about an hour's drive to the beaches of South Padre Island.

(The rankings are based on the Council for Community and Economic Research's Cost of Living Index, which includes 2016 price data for 288 urban areas. City-level data on populations, household incomes and home values come from the U.S. Census Bureau. Metropolitan-area unemployment rates for 2016 come from the U.S. Bureau of Labor Statistics.)